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CEE MARKETS-Leu reaches multi-week high, liquidity shortage persists
October 5, 2017 / 10:28 AM / 2 months ago

CEE MARKETS-Leu reaches multi-week high, liquidity shortage persists

    * Leu gains to highest level vs euro since mid-August
    * Romanian three-month interbank rate near three-year high
    * Romanian central bank may pump more money into markets
    * Czech crown rises to highest since cap on value removed

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, Oct 5 (Reuters) - The leu reached its
strongest against the euro since mid-August on Thursday as
Romanian interbank interest rates held near a three-year high.
    The three-month interbank rate was asked at 1.78
percent on Wednesday, only a touch off the three-year highs that
it reached on Tuesday. In response, the central bank allotted
9.4 billion lei to commercial banks on Tuesday at its first such
auction since 2015, to ease a shortage of liquidity.
    The bank said it could continue to pump money into interbank
markets if it's needed. It also warned on Tuesday that rising
inflation might require higher rather than lower interest rates.
    The leu touched multi-week highs against the euro on
Thursday, trading at 4.5735 to the euro at 0845 GMT, up 0.1
percent.
    One Bucharest-based trader said stop-loss orders on the firm
side of 4.6 helped the leu, but interest rates were not high
enough to keep the currency at its current levels.
    "In the medium term, the leu will weaken," the trader said.
"Nothing supports it, including the fiscal side.
    Apart from Romania, only the Czech central bank among 
Central Europe's policymakers have said they were worried about
rising inflation. 
    In August, the Czech central bank became the first in the
European Union to raise rates since 2012. Expectations for a
further rate increase in November have helped the crown
 climb to multi-year highs.
    On Thursday it reached 25.801 to the euro, its strongest
since April, when the central bank removed a cap that had kept
the crown weaker than 27 to the euro since late 2013.
    A strong crown could slow the pace of rate increases,
Raiffeisen analyst Stephan Imre said in a note.
    Foreign investors sitting long crown positions have not
rushed to take profit so far, allowing the currency to
strengthen.
     
               CEE MARKETS  SNAPSH   AT  1045 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                25.822  25.826   +0.02   4.59%
                                 0       5       %  
 Hungary                    311.50  311.84   +0.11  -0.86%
 forint                         00      00       %  
 Polish zloty               4.3004  4.2967  -0.09%   2.41%
 Romanian leu               4.5735  4.5786   +0.11  -0.84%
                                                 %  
 Croatian                   7.5060  7.5016  -0.06%   0.65%
 kuna                                               
 Serbian                    119.10  119.12   +0.02   3.57%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1053.9  1052.5   +0.14   +14.3
                                 4       1       %      6%
 Budapest                   37818.  37923.  -0.28%   +18.1
                                22      24              7%
 Warsaw                     2448.1  2444.1   +0.16   +25.6
                                 6       9       %      8%
 Bucharest                  7899.8  7888.6   +0.14   +11.5
                                 0       6       %      0%
 Ljubljana                  801.61  800.92   +0.09   +11.7
                                                 %      1%
 Zagreb                     1801.7  1801.3   +0.02  -9.68%
                                 0       4       %  
 Belgrade                   720.44  720.66  -0.03%   +0.43
                                                         %
 Sofia                      675.64  677.35  -0.25%   +15.2
                                                        1%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                    0.335   0.024   +102b   +1bps
                                                ps  
   5-year                    0.508   0.029   +077b   +2bps
                                                ps  
   10-year                   1.333  -0.005   +088b   -1bps
                                                ps  
 Poland                                                   
   2-year                    1.722  -0.017   +241b   -3bps
                                                ps  
   5-year                    2.708   0.014   +297b   +0bps
                                                ps  
   10-year                   3.381   0.006   +292b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.74    0.87       1       0
               IBOR=>                               
 Hungary               <BU    0.07    0.11    0.14    0.03
               BOR=>                                
 Poland                <WI    1.77    1.82   1.885    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
 
 (Reporting by Sandor Peto, editing by Larry King)
  
 
 

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